In the world of construction litigation, everything begins and ends with your contract. Although contract drafting and negotiation may feel like a burdensome process that stands in the way of commencing work and earning profits, it is probably one of the most important aspects of your business, and one that can make or break your success on a project—regardless of whether or not a dispute arises during the course of your work.
Contract Disputes
When contract disputes arise, the first thing your attorney will request is the entire contract, including all of the conditions and specifications, as well as any addendums and change orders. All of these documents are important because when read together, they determine the rights and obligations of the parties. Many times the contract is silent on an issue—either because the parties did not foresee a particular issue arising during the project, or because they simply wanted to avoid the issue. Sometimes, it is appropriate for contracts to remain silent on an issue in order to permit “interpretation” if a dispute arises.
Aside from the facts of your particular dispute, and any relief that may be available under applicable law, your contract is the entire legal landscape of your claims and defenses. Not all contracts have to be in writing to be valid, and even if they are in writing, they don’t have to be signed in order to be binding. In fact, some courts have determined that the parties’ actions alone may be enough to modify the terms of a written contract.
Avoiding Contract Disputes
Clarity is the key to a good contract—regardless of whether it is oral or written. Because it is your business, it is critical that you notify your attorney of any issues that have arisen on other projects, and to consult with your attorney about how those issues are addressed in the contract you are about to sign. Your attorney should also advise you of provisions that may expose your company to business risks.
Each day, contractors and subcontractors assess the costs and benefits of making business decisions. These decisions involve risk, and in the construction industry, such choices revolve around two things: legal obligations and contractual obligations. You cannot change the legal obligations, but you do have the ability to shape your contractual obligations. In order to do so, it is critical to understand your position on all of these issues.
In the world of construction, contracts drive business. Your attorney should help you understand how courts have interpreted particular contractual and legal provisions, and how to properly assess the risks and benefits of those obligations in your particular business.
